1. Marketing Planning & Problem Solving [Dr. Carter; MKTG.490] COMBINED SET OF 1 st SECTION MARKETING PLANNING TEXT SLIDES

2. Chapter 1: Introduction to Marketing Planning The Marketing Plan Handbook 3rd ed. Marian Burk Wood 1-1

3. Marketing Planning Defined Marketing Planning is a systematic, structured process. It includes: 1. Researching and analyzing the current situation. 2. Developing and documenting the firm’s objectives, strategies and programs, 3. Implementing, evaluating and controlling marketing activities. 1-2

4. Contents of The Marketing Plan I. Executive Summary II. Current Situation III. Objectives and Issues IV. Target Market, Customer Analysis and Positioning V. Marketing Strategy VI. Marketing Programs VII. Financial Plans VIII. Implementation and Controls 1-3

5. The Marketing Planning Process 1-4

6. Step 1: Research and Analyze the Current Situation The marketer performs both: 1. External analysis, and 2. Internal analysis 1-5

7. External Analysis External analysis involves the understanding of trends that may impact marketing strategy: Demographic Economic Technological Political-Legal Ecological Social-Cultural 1-6

8. Internal Analysis Marketers also assess the firm’s capabilities and the strategies of competitors in order to: Build on strengths Exploit competitors’ weaknesses 1-7

9. Other Analyses Other areas that are analyzed for their impact on marketing strategy include: Customers Suppliers Distributors Partners, and Other Stakeholders 1-8

10. Step 2: Understand Markets and Customers Can be consumers or businesses A comprehensive understanding of the customer is desired:  Buying habits, needs, wants, attitudes and behaviors.  Who?, What?, Where?, When?, Why?, How?  Are buying patterns changing? Why? 1-9

11. Step 3: Segmentation, Targeting and Positioning The purpose of segmentation: To group customers with similar needs, wants, behavior or attitudes. Targeting: The selection of specific segments for marketing. Can be to one segment, multiple segments, or the entire market. Positioning: Using marketing to create a competitively distinctive place (position) for the brand or product in the mind of the targeted customers. 1-10

12. Step 4: Plan Direction, Objectives, and Marketing Support Goals: Long-term performance targets. Objectives: Shorter-term targets that support the achievement of goals. Sustainable Marketing:  Balancing long-term goals with short-term objectives and budget realities.  Balancing goals and objectives with an eye toward being responsible to the larger society. 1-11

13. Six Approaches to Growth Based upon permutations of markets and products. 1-12 CURRENT MODIFIED INNOVATED EXISTING EXPANDED (Geographic) ENTIRELY NEW Market Penetration Market Development Product Development Diversification

14. Step 5: Develop Marketing Strategies and Programs Utilizing the tools of the “marketing mix”. Consistent with the firm’s overall direction, goals and strategies. Includes the development of strategic alliances. 1-13

15. Alliance Provides Value 1-14

16. Primary Marketing Tools The primary tools for marketing, referred to as the “Marketing Mix” are: Product Price Promotion, and Channels 1-15

17. The Marketing Mix 1-16

18. Product Tangible good or an intangible service. Must be considered in a holistic fashion. Branding must also be considered. 1-17

19. Pricing Based upon a number of factors: How customers perceive the value of the offering. Positioning. Product costs. Competitive forces. Objectives of the organization. 1-18

20. Channel How, when and where to make the goods and services available to customers. Requires effective relationships with channel partners. 1-19

21. Promotion Involves the following activities: Advertising Public Relations Sales Promotion Personal Selling Direct Marketing Use of the Internet 1-20

22. Step 6: Track Progress, Implement and Control Mechanisms and methods of measuring progress toward goals:  Sales forecasts  Budgets  Schedules Comparing actuals vs. projections or the plan. Making changes as needed. 1-21

23. Preparing for Marketing Planning Marketers must develop a number of professional and organizational strengths, including: Knowledge of markets and customers, Core competencies, and Strategic relationships 1-22

24. Support Strategies: Customer Service Customer Service: Reinforces positive perceptions. Enhances business through reputation and referral. Helps differentiate from competitors. Poor service alienates otherwise loyal customers. 1-23

25. Support Strategies: Internal Marketing Internal Marketing: Focuses all employees on serving customers. Builds support for the marketing plan. Enhances execution of the marketing plan throughout the organization. 1-24

26. 5 Guiding Principles for Effective Marketing Planning 1. Expect Change 2. Emphasize Relationships 3. Involve Everyone 4. Seek Alliances 5. Innovate to Provide Value 1-25

27. Chapter 2: Analyzing the Current Situation The Marketing Plan Handbook 3rd ed. Marian Burk Wood 2-1

28. Environmental Scanning and Analysis Involves the analysis of both: Internal Factors, and External Factors 2-2

29. Internal Factors Mission Resources Offerings Previous Results Business Relationships Keys to Success and Warning Signs 2-3

30. External Factors Demographics Ecological Economic Technology-related Political-Legal Social-Cultural Competitors 2-4

31. Internal Analysis: Mission Mission: States the firm’s fundamental purpose. Indicates how the firm will add value. 2-5

32. Internal Analysis: Resources Human Financials Informational Technology Supply 2-6

33. Internal Analysis: Offerings Examining what the firm is currently offering in the way of goods and services: Fit with mission and resources. Affirm role of each line and item. 2-7

34. Internal Analysis: Previous Results Results include:  Sales (dollars and units).  Profitability.  Customer acquisition and retention costs.  Other financial results. Provide clues to firm’s strengths and weaknesses. Helps separate the effective programs from the less-effective programs. 2-8

35. Internal Analysis: Business Relationships Includes relationships with: Suppliers Distributors Other business partners Examine: Capacity Quality Value provided 2-9

36. Internal Analysis: Keys to Success and Warning Signs Keys to Success:  Identify special factors most crucial to success.  Maintain focus on key priorities. Warning Signs  Indicate potential problems with the plan. 2-10

37. External Analysis: Demographic Trends Examined by target market:  Consumer Demographics  Business Demographics 2-11

38. External Analysis: Consumer Demographic Trends Key consumer demographic trends include: Population growth Population composition:  Age  Gender  Ethnicity  Religious makeup  Education  Occupation  Household size  Income 2-12

39. External Analysis: Business Demographic Trends Size and growth of industries  Number of companies.  Number of locations or branches.  Number of employees.  Sales revenues. Trends in new business formation may signal emerging opportunities. 2-13

40. External Analysis: Economic Trends Must keep an eye on global, national, regional and local economic trends. Some measures typically monitored:  Buying power  Income  Debt  Credit Usage 2-14

41. External Analysis: Ecological Trends Potential impacts:  Availability of raw materials.  Government regulations.  Social attitudes. 2-15

42. External Analysis: Technological Trends Key trends include: Cell phones Computers Digital media Internet access Increasing bandwidth 2-16

43. External Analysis: Political-Legal Trends Legal Trends: Laws includes international, federal, state and local. Related to: Competitive behavior Pricing Taxation Promotion Distribution Product liability Labeling 2-17

44. External Analysis: Political-Legal Trends Political Trends Global. national, or local Can signal a change in the legal environment. 2-18

45. External Analysis: Social-Cultural Trends Key trend: Increasing diversity in markets. Keep tabs on popular culture.  Tends to be volatile. Core beliefs and values change more slowly over time. 2-19

46. External Analysis: Competitors Identify:  Current competitors.  Possible future competitors. Learn about the unique competitive advantages of each competitor. Track trends in market share. 2-20

47. Porter’s Five Forces Model 2-21

48. Three Fundamental Business Strategies Cost Leadership Strategy Differentiation Strategy Focus Strategy 2-22

49. SWOT Analysis Strengths Weaknesses Opportunities Threats 2-23

50. SWOT Analysis (cont’d) 2-24

51. Exhibit 2.5 Judging Organizational Strengths & Weaknesses Past Performance TrendsComparison vs. Competitors Specific Goals or Targets Personal Opinions of Strategic Decision Makers Are organizational resources & capabilities strengths or weaknesses?

52. Chapter 3: Understanding Markets and Customers The Marketing Plan Handbook: 3rd ed. Marian Burk Wood 3-1

53. What is a Market? Market = All the potential buyers for a particular product or service. Markets can be defined by:  Product  Customer definition  Geography 3-2

54. Markets Must Be Analyzed Markets are always changing Market analysis is performed to better understand:  Requirements  Behaviors, and  Attitudes 3-3

55. Market Share Market share : The percentage of total sales (dollars or units) held by a particular company, brand or product. Directly affects segmentation and marketing. Serves as a baseline for understanding historical market dynamics. 3-4

56. Consumer vs. Business Markets 3-5

57. 5 Basic Levels of Market Definition LevelDefinition Potential Market All customers who may be interested in a particular offering. Available Market Customers who are interested, possess sufficient income, and have access to the offering. Qualified Available Market Customers who are qualified to buy based on age or other criteria. Target Market Customers that the company intends to target. Penetrated Market Customers who are already buying the product. 3-6

58. Analyzing Customer Needs and Behavior 3-7

59. Analyzing Consumer Markets Information needs include: Who? What? Where? When? Why? How? 3-8

60. Considerations for the Consumer Market Cultural Social Personal 3-9

61. Consumer Market: Cultural Considerations Different cultures means different approaches to buying situations, due to differing values, beliefs and preferences. Subcultures: Groups within a larger culture that preserve distinct cultural identity:  Religion  Ethnic background  Lifestyle Class: Levels of socioeconomic status.  Persons of same class exhibit similar behaviors 3-10

62. Consumer Market: Social Considerations Social influences on behavior include:  Family members  Friends  Work Groups  Civic Organizations Within social groups, consumers are influenced by opinion leaders, who provide advice and guidance. 3-11

63. Consumer Market: Personal Considerations Personal factors include:  Family life cycle  Lifestyle  Psychological makeup Psychographic characteristics include:  Motivations  Perceptions  Attitudes 3-12

64. Considerations for the Business Market Special considerations for businesses include: Organizational Connections  Internal players  Suppliers Organizational Considerations  Company characteristics  Derived demand 3-13

65. Organizational Connections: Internal Players Also to consider: Those who initiate the decision Those who use the products/services Those who evaluate the alternatives Those who approve the release of funds 3-14

66. Organizational Connections: Suppliers Current relations with competing suppliers should be considered: Long-term contracts Evaluations Requirements Other elements 3-15

67. Organizational Considerations: Company Characteristics Company characteristics include: Company’s size and industry Current market share and growth Competitive situation Buying policies and procedures Financial constraints Timing of the purchases 3-16

68. Organizational Considerations: Derived Demand Derived demand: The principle that demand for business products is based upon (derived) demand for related consumer products. Derived demand requires that B2B marketers be aware of emerging trends and needs in consumer markets and be ready to help their business customers serve their consumer customers. 3-17

69. Planning Marketing Research Two basic types of research: Secondary Research:  Information already collected for another purpose.  More readily available and less expensive than primary research. Primary Research:  Research conducted to address a specific situation 3-18

70. Examples of Sources of Secondary Research 3-19

71. Secondary Research: Some Cautions Some cautions for using secondary research: Before using, check dates and sources. Consider the source’s credibility  Reputable?  Unbiased? Look into the sources cited by your secondary source Be careful about applying general learning to your specific situation. 3-20

72. Primary Research Problem Definition  What information is needed?  How will it be used? Data Collection  Methods include: Observation Surveys Experiments 3-21

73. Primary Research Techniques: Focus Groups Small group of customers/prospects Guided discussion Yields insights into customer thinking, attitudes and behaviors Drawback: May not be representative of the entire market. 3-22

74. Primary Research Techniques: Ethnographic Research Ethnographic Research: Observing how customers behave in actual product purchase or usage situations, and asking to clarify the reasons for behavior. Helps marketers to:  Develop new product ideas.  Fine-tune personal selling approaches.  Plan for other marketing attention. 3-23

75. Using Marketing Research If research is needed, include this as a budget item in your marketing plan. Plan for ongoing market research to help measure results during implementation. Good decision making involves weighing the pros and cons of making a decision based on limited data, or waiting for research. Be respectful of consumer privacy concerns. 3-24

76. Chapter 4: Planning Segmentation, Targeting and Positioning The Marketing Plan Handbook: 3rd ed. Marian Burk Wood 4-1

77. Fragmentation and Intense Competition Customers exhibiting a wider variety of:  Needs  Attitudes, and  Behaviors Companies must differentiate themselves more distinctly in the markets where they compete. 4-2

78. The Need for Segmentation, Targeting and Positioning A move away from mass marketing. A move towards segment marketing. Allows marketers to focus their resources on the most promising opportunities. Improves marketing efficiency and effectiveness 4-3

79. Market Segmentation Definition: the process of grouping customers within a market according to similar needs, habits or attitudes that can be addressed through marketing. Even within a large segment, marketers often can identify niches. 4-4

80. Steps in the Segmentation Process 1.Select the general market:  Eliminate markets that have no need for the product or are inappropriate for other reasons. 2.Apply segmentation variables. 3.Assess and select segments for targeting 4-5

81. Overview of Segmentation, Targeting and Positioning 4-6

82. Consumer Segmentation Variables Type of VariableExamples Behavioral and Attitudinal Benefits sought, rate of usage, attitude toward product and usage, price sensitivity. DemographicAge, gender, family status, household size, income, occupation, education. GeographicLocation, distance, climate. PsychographicLifestyle, activities, interests. 4-7

83. Segmenting by Behaviors and Attitudes In many ways, the best way to segment: Help marketers analyze the specific value that a particular group expects from the offering. Include variables like: Benefits required or expected Usage occasion and status Loyalty status Technological orientation Attitudes toward products or usage 4-7

84. Segmenting by Demographics Popular for segmentation because they are common and easily identified consumer characteristics. Often point to meaningful differences in:  Consumer needs and wants.  Product consumption.  Media usage. However, care must be taken to avoid over-generalization or stereotyping. 4-9

85. Segmenting by Geographics May be based on: A company’s ability to sell and service products in certain areas or climates, Its interest in entering promising new markets, or Its reluctance to sell in certain areas due to environmental threats or unfavorable climate. 4-10

86. Segmenting by Psychographics Includes such variables as lifestyles, activities, interests and attitudes. Provides a deeper understanding of what and why consumers buy. When consumer activities or interests cross demographic and/or geographic lines. 4-11

87. Business Segmentation Variables Type of VariableExamples Behavioral and Attitudinal Purchasing patterns and process, user status, benefits expected, order size/frequency, buyer/influencer/user attitudes. DemographicIndustry, business size, business age, ownership structure. GeographicLocation, distance, climate. 4-12

88. Segmenting by Behaviors and Attitudes Helps marketers identify what specific business segments want and value, as well as how/why they buy. Includes variables such as:  Purchasing patterns  User status  Attitude toward technology  Loyalty status  Price sensitivity  Order size/frequency  Attitudes  Benefits expected 4-13

89. Segmenting by Demographics Common business demographic variables used: Industry Business size Business age Ownership structure 4-14

90. Segmenting by Geographics Utilizes such variables as nation, region, state, city and climate. Allows for the grouping of potential customers according to:  Concentration of outlets  Location of headquarters  Geography-related needs or responses 4-15

91. Assessing Potential Target Markets Target Market: The segment of the overall market that a company chooses to pursue. Each potential segment must be evaluated based upon fit with the firm’s:  Resources  Core competencies  Goals and objectives  Offerings 4-16

92. Assessing Segment Attractiveness 4-17

93. Ranking and Choosing Among Potential Segments Here is an approach sometimes taken: 1. Take all potential targets. 2. Rate each potential target across a number of selected criteria. Develop “importance” weights for each of the criteria. 3. Develop a composite score for each segment. 4-18

94. Sample Segment Ranking Segment Growth Potential Competitive Superiority Fit with Company Resources Overall Score A35210 B54413 C4239 Scoring key: 5 = highly attractive, 4= moderately attractive, 3 = average, 2 = moderately unattractive, 1 = highly unattractive 4-19

95. Coverage Strategies Concentrated Marketing  Concentrating the marketing efforts on only one key segment. Undifferentiated Marketing  Targeting all segments with the same marketing strategy. Differentiated Marketing  Creating a separate marketing strategy for each segment. 4-20

96. Personas Growing number of companies are gaining insights by developing personas:  Detailed but fictitious profiles representing how individual customers in their targeted segments behave, live and buy. Give marketers a deeper understanding of what shapes each segment’s needs, preferences, buying behavior and consumption patterns. 4-21

97. Positioning Positioning is the differentiation of the brand or product on the basis of attributes that customers find meaningful. Positioning conveys the value that the brand provides and sets the brand apart. Sets the tone for the marketing plan. Should be re-evaluated periodically. 4-22

98. Meaningful Differentiation Some sources of meaningful differentiation:  Product features  Service attributes  Channel attributes  Pricing attributes  Other attributes Consideration is also given to positions being staked out by the competition. 4-23

99. Chapter 5: Planning Direction, Objectives, and Marketing Support The Marketing Plan Handbook: 3rd ed. Marian Burk Wood 5-1

100. Determining Marketing Plan Direction The ultimate purpose of the marketing plan is to help the organization achieve its objectives.  Goals = Long-term objective targets.  Objectives= Short-term objective targets The direction chosen must be consistent with the organization’s priorities and strengths. 5-2

101. Options for Marketing Plan Direction 5-3

102. Growth Most business plans call for unit or dollar sale growth. The four broad strategies for growth are: Market penetration Market development Product development, and Diversification 5-4

103. Market Penetration Is the growth strategy in which the company sells more of the existing products to customers in existing markets or segments. It is especially viable for companies that can build on established customer relationships and positive value perceptions. 5-5

104. Market Development Market development involves identifying and reaching new segments or markets for existing products. 5-6

105. Product Development Product development is a growth strategy in which the company sells new products to customers in existing markets or segments. 5-7

106. Diversification Diversification is a growth strategy of offering new products in new markets to take advantage of new opportunities:  Through internal product development capabilities, or  By starting or buying a business 5-8

107. Pros and Cons of Diversification Advantage: Diversification can help avoid over- reliance on a small number of products or markets Disadvantage: Diversification can dilute available resources and open the organization to competitive attacks on multiple fronts. 5-9

108. Growth Not Always Possible Growth not always desirable or possible  E.g., tough economic times Priorities may be to:  Maintain current share  Seek highest possible profits  Retrench 5-10

109. Nongrowth Strategies Nongrowth strategies include: Filing for bankruptcy Withdrawing from certain markets Deleting products Limiting distribution Closing a division 5-11

110. Setting Marketing Plan Objectives Exact objectives depends upon: The current situation. Environmental issues and keys to success. Customers in targeted segments. The organization’s mission and goals. The chosen positioning. 5-12

111. Keys to Effective Objectives Specific, time-defined and measurable. Realistic, but challenging. Consistent with the mission and overall goals. Consistent with internal environmental analysis. Appropriate in light of opportunities and threats. 5-13

112. Three Types of Objectives in Marketing Plans Marketers usually set three types of objectives in marketing plans: Marketing objectives: Targets for managing certain marketing relationships and activities, Financial objectives: Targets for managing certain financial results, and Societal objectives: Targets for achieving particular results in social responsibility. 5-14

113. Marketing Objectives Targets for managing certain marketing relationships and activities: Customer acquisition Customer retention Customer satisfaction Channel relationships Unit sales Market share Product development Order fulfillment 5-15

114. Financial Objectives To be effective, financial and marketing objectives should be consistent. At times, key financial objectives may give way to achieve a coveted marketing objective. Financial objectives generally include:  Sales volume and product targets  Profitability targets  Return on Investment (ROI) targets  Break-even targets 5-16

115. Answering to Stakeholders Various stakeholders have an interest in the activities of the organization:  Customers  Suppliers  Employees  Civic leaders  Others These stakeholders track company progress on key issues and often hold them accountable. 5-17

116. Societal Objectives Fulfilling societal objectives: Polishes company and/or brand image. Shows the organization is doing something constructive about important issues. Some of the key issues include:  “Greener” products  Charitable donations  Involvement in community projects  Energy conservation  Issue awareness 5-18

117. Cause Related Marketing Links the marketing of a brand, good or service to a charitable cause. Although charitable, there is an explicit marketing connection. 5-19

118. Planning Marketing Support Before plunging into the details of planning the marketing mix, marketers need to set objectives for two aspects of marketing support: Internal Marketing: marketing to managers and employees inside the company, and  This includes upward communication Customer Service 5-20

119. Internal Marketing May take the form of: Internal newsletters Web pages Training meetings Marketing or sales meetings Other techniques 5-21

120. Internal Marketing Support Objectives Keep employees focused on customers. Keep employees involved in marketing. Keep employees informed about marketing. Improve employee performance and satisfaction. 5-22

121. Customer Service Customers have different customer service needs at different points in the buying process: Before the sale At the moment or point of sale After the sale 5-23

122. Customer Service Objectives Meet targeted segment’s needs, expectations. Attract, retain, satisfy customers. Reinforce the product or brand positioning. Allocate service resources appropriately. Service recovery  Customer service is rarely perfect every time 5-24

123. Shaping the Marketing Mix Managers look to the key priorities of the organization as they determine action steps and allocate resources. All tactics and programs developed :  Must be consistent with mission, direction, goals and objectives, and  Support the mission, direction, goals and objectives. 5-25

124. The Strategy Pyramid 5-26